Nigerian corporates are increasingly turning to the debt capital market to meet their funding needs as elevated bank lending rates continue to constrain access to traditional credit. Data from FMDQ Securities Exchange Limited reveals that commercial paper (CP) issuances surged to ₦1.58 trillion in the first seven months of 2025, marking a 107.16 percent increase from ₦763.43 billion recorded in the same period in 2024. This sharp rise highlights a growing preference for short-term market instruments as companies seek to manage liquidity and reduce borrowing costs amid a tight banking credit environment.
The shift is closely linked to Nigeria’s high interest rate regime, driven by aggressive monetary tightening by the Central Bank of Nigeria. As a result, borrowing costs in the banking system have remained elevated, pushing corporates to explore alternative financing channels. FMDQ-linked market data shows that commercial paper discount rates averaged about 22.38 percent in 2025, with yields reaching as high as 26 percent for mid-tier issuers, depending on tenor and creditworthiness. These rates are often more competitive than bank lending rates, which are frequently higher and less flexible, especially for long-term funding needs.
Between April and October 2025 alone, over ₦753 billion was raised through capital market instruments, demonstrating sustained demand across key sectors such as manufacturing, energy, and financial services. Recent transactions on the FMDQ platform underscore the scale and diversity of issuers tapping into the market. Notable examples include a ₦100 billion commercial paper programme by Providus Bank, a ₦54.03 billion bond listing by UAC of Nigeria Plc, and a ₦30.05 billion commercial paper issuance across multiple corporates in a single week. Accion Microfinance Bank also raised ₦2.02 billion through CP to support its lending expansion.
Large corporations such as Dangote Cement, Citibank Nigeria, and UAC Nigeria have executed multi-series commercial paper programmes worth tens of billions of naira. This trend reflects a broader structural shift, as companies bypass traditional banks and go directly to investors via capital market platforms. The advantages include flexible pricing, faster execution, and access to institutional investors like pension funds and asset managers. At the same time, it signals stress within the traditional credit system, where high interest rates and tighter lending conditions are limiting corporate growth and investment.
From an investor perspective, the surge in capital market activity indicates deepening of Nigeria’s debt market, particularly in short-term instruments. There is growing appetite for corporate debt, driven by attractive yields, while reduced dependence on bank financing improves capital allocation efficiency. However, risks remain, as high yields reflect macroeconomic pressures, inflation, and credit risk. Only stronger, creditworthy corporates can consistently access the market at competitive rates.
With over ₦1.58 trillion raised in just seven months, Nigeria’s capital market is rapidly becoming the preferred funding channel for corporates navigating a high-interest-rate environment. The key test ahead will be whether this momentum can be sustained as monetary policy evolves and whether increased access to funding translates into stronger earnings, cash flow, and long-term shareholder value.
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